Gift Annuity State Regulations



General Definition

Any part of the net estate of a decedent not disposed of by will is distributed by the personal representative to the heirs of the decedent. Sec. 3-101.

Order of Distribution

If the decedent leaves a spouse a minor child or children, the surviving spouse is entitled to 1/2 of the estate. If the decedent leaves no minor child but leaves some other descendants, the surviving spouse is entitled to the first $40,000 of the estate plus 1/2 of the residue of the estate. If the decedent is survived by a parent(s) only, the surviving spouse is entitled to the first $40,000 of the estate plus 1/2 of the residue of the estate. If there is no surviving descendants or parents, the surviving spouse is entitled to the entire estate. Sec. 3-102.

If there is no surviving spouse, the surviving parents of the decedent share the estate equally. If there is no surviving parent, descendants of the parents take the estate by representation. If there is no surviving parent of a descendant thereof, the paternal and maternal grandparents split the estate equally. Sec. 3-104.

If there are not surviving heirs of the decedent, the estate escheats to the state of Maryland. If the decedent was a recipient of long-term care benefits under the Maryland Medical Assistance Program, then the estate is liquidated and the proceeds paid over to the Department of Health and Mental Hygiene. Otherwise, the proceeds of the estate are paid over to the county board of education. Sec. 3-105.

Will Qualifications

Common Law or Community Property

Maryland is a common law property state.


Any person may make a will if he or she is 18 years of age or older and legally competent to make a will. Sec. 4-102.


A will must be in writing, signed by the testator and attested and signed by two or more credible witnesses in the presence of the testator. Sec. 4-102. However, a handwritten will by one who is serving in the armed services is valid as a holographic will if signed by the testator outside of a state of the United States, the District of Columbia, or a territory of the United States even if there are no attesting witnesses. Sec. 4-103.


An "heir" is a person entitled to property of an intestate decedent. Sec. 1-101(h).


To revoke or alter a will, the testator may create a new will which either expressly revokes or by its operation replaces and earlier will. Alternatively, the testator may revoke a will by burning, tearing, obliterating or destroying it. If after making a will the testator marries and has a child, the will is revoked. If after making a will the testator is divorced, all provisions in the will in favor of the testator's spouse are revoked. Sec. 4-105.

Probate Process

Naming of Personal Representative

The court will issue letters of estate administration in the following order:

  1. The personal representative named in the decedent's will;
  2. The surviving spouse and children of an intestate decedent, or the surviving spouse of a testate decedent;
  3. The residuary legatees;
  4. The children of a testate decedent who are entitled to share in the estate;
  5. The grandchildren of the decedent who are entitled to share in the estate;
  6. The parents of the decedent who are entitled to share in the estate;
  7. The brothers and sisters of the decedent who are entitled to share in the estate;
  8. Other relations of the decedent who apply for administration;
  9. The largest creditor of the decedent who applies for administration;
  10. Any other person having a pecuniary interest in the proper administration of the estate of the decedent who applies for administration;
  11. Any other person. Sec. 5-104.

Submission of Will

Along with the decedent's will, the personal representative must submit the name, domicile, place, and date of death of the decedent, state the interest of the person filing the petition, shall state the county in which the decedent was domiciled at the time of his death. Sec. 5-201.


After the appointment of a personal representative, the register of the court will have a notice of the appointment published in a newspaper of general circulation in the county of appointment once a week in three successive weeks, announcing the appointment and address of the personal representative and notifying creditors of the estate to present their claims. The personal representative must file a certification that a notice has been published. Sec. 7-103.

Within 20 days of appointment, the personal representative must deliver to the register the text of the first published newspaper notice. The personal representative must also advise the register of the names and addresses of the heirs of the decedent and of the legatees to the extent known so that the register may issue the notices. Sec. 7-104.

The personal representative must also make diligent and reasonable effort to discover the names of creditors of the estate. Notice of the personal representative's appointment and an invitation to submit claims must be sent to each. Sec. 7-103.1.


Within 3 months after his or her appointment, the personal representative must prepare and file an inventory of property owned by the decedent at the time of death. The inventory must list each item, its fair market value as of the date of the death and any encumbrance that may exist. Sec. 7-201.

Elective Share and the Family Allowance

The surviving spouse is entitled to receive an allowance of $10,000 for personal use. An allowance of $5,000 for the use of each unmarried child of the decedent who is under the age of 18 will be paid by the personal representative. Sec. 3-201.

Instead of property left to the surviving spouse by will, the surviving spouse may elect to take a 1/3 share of the net estate if there is also a surviving issue, or a 1/2 share of the net estate if there is no surviving issue. Sec. 3-403.

Debts and Distributions

If the assets of an estate are insufficient to pay in full all demands against it, payment will be made in the following order:

  1. Fees due to the county register;
  2. Costs and expenses of administration;
  3. Funeral expenses;
  4. Compensation of personal representatives;
  5. The family allowance;
  6. Taxes due;
  7. Reasonable medical, hospital, and nursing expenses of the last illness of the decedent;
  8. Rent payable by the decedent for not more than three months in arrears;
  9. Wages, salaries, or commission for services performed for the decedent within three months prior to death of the decedent;
  10. Assistance paid under the Public Assistance to Adults Program;
  11. All other claims. Sec. 8-105.

A person may disclaim his or her interest in the property of the estate. To be valid, the disclaimer must be in writing, describe the interest or power disclaimed, be signed and delivered to the personal representative. Sec. 9-202.

Estate/Inheritance Tax

Estate Tax

Estates less than $5 million (for decedents dying on or after January 1, 2019) will pay no estate tax. Above that amount, the estate is subject to tax at graduated rates up to 16%. MD CODE ANN. TAX-GEN § 7-309.

Inheritance Tax

Dispositions to lineal ancestors and descendants (as well as their spouses), siblings, spouses, family controlled corporations, charitable organizations and dispositions under $1,000 are not subject to the Maryland inheritance tax. MD CODE ANN. TAX-GEN § 7-203.

Other dispositions in excess of $1,000 are subject to a tax of 10% on the value of the property that passes from a decedent. MD CODE ANN. TAX-GEN § 7-204. The inheritance tax is paid, before it is distributed, by the person who distributes the property from the estate. MD CODE ANN. TAX-GEN § 7-216.

Income Tax Charitable Deductions and/or Credits

Maryland allows a taxpaying resident to deduct itemized charitable gifts in the same manner as the IRS. The amount of deductions must be reduced if the taxpayer chooses to use the Maryland tax credit for conservation easements, discussed below. MD Code Ann. Tax-Gen §10-218.

Resident taxpayers are also permitted to take a tax credit for an easement conveyed to the Maryland Environmental Trust or the Maryland Agricultural Land Preservation Foundation if the easement is perpetual and accepted by the Board of Public Works. The amount of the credit is equal to the difference between the fair market value (FMV) of the land before the establishment of the easement and the FMV of the land after the establishment of the easement. In no event shall the amount of the credit exceed the lesser of the taxpayer's income tax liability or $5,000. The tax credit may be carried forward for 15 years from the year the easement is accepted by the Board of Public Works. MD Code Ann. Tax-Gen §10-723.

Gift Annuity Requirements

Maryland, a "registration" state, requires the issuance of a special permit to issue charitable gift annuities under Maryland Insurance Code Sec. 16-114 and Maryland Insurance Administrative Reg. 31.09.07. Charities must obtain a permit from the Maryland Insurance Administration and meet the annual filing and reserve requirements before issuing charitable gift annuities. Permits are issued to educational or religious organizations, hospitals and community foundations. A community foundation is defined as "a nonprofit organization that is formed to receive contributions and distribute money to meet cultural, educational, charitable, environmental, civic, or other similar needs of a community and governed by a board of private citizens who reside in the community." Failure to comply with state law may result in a revocation or suspension of the special permit.

To qualify, applying charities must maintain a segregated account fund and either have been (i) a Sec. 501(c)(3) tax-exempt organization in continuous operation in Maryland for at least 10 years (this is broadly defined and does not require a physical office in the state) or (ii) have been a community foundation that has been in existence between five and 10 years that maintains 100% of admitted assets of its contributions.

If you are offering the new IRA to CGA rollover option, updated contracts may need to be submitted for approval. If you adopt the ACGA rate schedule, you may need to submit an updated rate schedule when new rates are issued.

Registration Process

To register for a permit with the Insurance Administration, the charity must assert that it meets the above qualifications and provide supporting documentation, although no state form is provided. No fee is required. Required documents and information include evidence of the charity's tax-exempt status, bylaws, schedule of the current and deferred gift annuity rates, the most recently independent financial statement, a description of the proposed investments for the segregated fund, a description of the charity's activities and number of years operating in Maryland, solicitation and marketing material and sample gift annuity agreements.

Disclosure Language

The charity must also provide the following state-required disclosure language, either in a separate disclosure signed by the donor before the annuity agreement or included in the signed annuity agreement itself:

"Payments made under charitable gift annuities are backed solely by the full faith and credit of the issuing organization. Payments under charitable gift annuities are not insured or otherwise guaranteed by any government entity."

Reserve Requirements

All permit-holding organizations must maintain a segregated fund with admitted assets at least equal to adequate reserves on its outstanding gift annuity agreements (certain community foundations excepted as mentioned above, instead maintaining 100% of the admitted asset contributions). This reserve requirement can be reduced for gift annuities that are reinsured by an authorized life insurer. The segregated fund should be invested according to the prudent investor rule.

Annual Filing Requirements

Once a permit is granted, Maryland requires annual filings submitted to the Insurance Administration within 180 days of the charity's fiscal year end. Annual filings must include the charity's most recently independently audited financial statement accompanied by a CPA's statement verifying the existence of adequate assets for the reserves.

State Contact Information

Director, Life, Annuities and Credit
Maryland Insurance Administration
Life and Health Section
200 St. Paul Place, Suite 2700
Baltimore, MD 21202-2004
Phone: (410) 468-2170
[email protected]

State Forms

For more information on state-specific form requirements, please contact Crescendo at 800-858-9154.

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